Is a licensed lawyer who is not currently practicing law but works as a licensed real estate salesperson bound by the Rules of Professional Conduct?

Plain-English summary

A lawyer licensed in multiple states including North Dakota, who did not actively practice law, wanted to obtain a real estate salesperson license and possibly work as a real estate agent. The lawyer acknowledged the questions were hypothetical (he had not yet applied for the real estate license), and the committee, while declining to answer hypothetical scenarios, addressed the broader question of how the Rules apply to a lawyer providing law-related services.

The committee identified Rule 5.7 as the governing rule, noting it had applied Rule 5.7 before (Op. 01-03 on tax services, Op. 98-07 on selling life insurance). Rule 5.7 makes a lawyer subject to the Rules when providing "law-related services," meaning services that might reasonably be performed in conjunction with legal services and are not unauthorized practice when done by a nonlawyer. The committee concluded, citing Comment 7's "real estate counseling" example and opinions from Nebraska and Utah, that a lawyer working as a real estate salesperson would be providing a law-related service.

The committee explained that Rule 5.7 exists to protect the public from mistakenly believing a law-related engagement carries the protections of a client-lawyer relationship. A lawyer may avoid the application of some Rules by taking reasonable measures under Rule 5.7(a)(2): communicating, in writing and before entering the agreement, that the relationship will not be a client-lawyer relationship. The committee stressed that the answer ultimately depends on the circumstances and could not be given definitively on hypothetical facts, that a lawyer is always bound by some Rules (citing Rule 8.4), and that a lawyer must take special care to separate real estate services from legal services, because activities like drafting or interpreting contracts, or applying zoning or environmental law to a transaction, are "closely entwined" with legal services, constitute the practice of law, and invoke all of the Rules.

In practice

This opinion, approved December 11, 2019, applies North Dakota Rule of Professional Conduct 5.7 (responsibilities regarding law-related services) as it stood at that time. The committee held that real estate sales work is a law-related service, and that a non-practicing North Dakota lawyer working as a real estate salesperson is bound by the Rules as to that work unless the lawyer takes reasonable measures, ordinarily a written disclaimer before the engagement, to assure the customer knows the services are not legal services and that client-lawyer protections do not exist. The committee held that a lawyer is always bound by some Rules (such as Rule 8.4) and must avoid closely entwining real estate services with legal services like drafting or interpreting contracts, which would constitute the practice of law and invoke all of the Rules.

Common questions

Q: Is a non-practicing lawyer who works as a real estate agent bound by the Rules of Professional Conduct?

A: It depends. The committee concluded that real estate work is a law-related service, so under Rule 5.7 the lawyer is bound by the Rules as to that work unless the lawyer takes reasonable measures to disclaim a client-lawyer relationship.

Q: How does a lawyer-agent limit which Rules apply to the real estate work?

A: The committee explained that under Rule 5.7(a)(2) the lawyer should communicate, in writing and before the engagement, that the relationship is not a client-lawyer relationship and that the protections of that relationship do not exist.

Q: Are there Rules the lawyer cannot escape even when only selling real estate?

A: Yes. The committee noted that a lawyer is always bound by some Rules, citing Rule 8.4 (misconduct), regardless of whether the lawyer is practicing law or providing only law-related services.

Q: When does real estate work cross into the practice of law?

A: The committee explained that activities closely entwined with legal services, such as drafting or interpreting contracts or applying zoning or environmental law to a transaction, constitute the practice of law and invoke all of the Rules.

Background and rules framework

The opinion interprets North Dakota Rule of Professional Conduct 5.7 (Model Rule 5.7, responsibilities regarding law-related services), including its definition of law-related services, Comment 7's "real estate counseling" example, the reasonable-measures disclosure standard of Rule 5.7(a)(2), and Comment 6 on services closely entwined with legal services. It notes the rule always-applicable backstop of Rule 8.4 and relies on the committee's prior Rule 5.7 opinions (Op. 01-03 and 98-07) and on Nebraska and Utah opinions treating real estate work as law-related.

The opinion is issued under North Dakota Rule for Lawyer Discipline 1.2(B), the safe-harbor provision protecting good-faith reliance on a written ethics-committee opinion.

Citations and references

Rules of Professional Conduct:

• Model Rule 5.7 / N.D.R. Prof. Conduct 5.7 (responsibilities regarding law-related services)
• Model Rule 8.4 / N.D.R. Prof. Conduct 8.4 (misconduct; always applicable)
• N.D.R. Lawyer Discipline 1.2(B) (safe harbor for reliance on a committee opinion)

Statutes:

• N.D.C.C. ch. 43-23 (licensure of real estate salespersons)

Other opinions cited:

• SBAND Ethics Op. 01-03 (tax services) and Op. 98-07 (selling life insurance)
• Nebraska Ethics Advisory Op. 06-4; Utah Ethics Op. 17-07 (real estate work as a law-related service)

See also

• ND Op. 19-02: Lawyer With a Second Job
• AZ Ethics Op. 05-01: Lawyer Investment Referral Fees
• DC Ethics Op. 344: Conflicts for Lawyer-Lobbyists

Source

• Landing page: https://www.sband.org/page/ethics_opinions
• Original PDF: https://cdn.ymaws.com/www.sband.org/resource/resmgr/ethics/opinion_19-03.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

STATE BAR ASSOCIATION OF NORTH DAKOTA
ETHICS COMMITTEE , .
OPINION NO. 19-03

THIS OPINION IS ADVISORY ONLY
FACTS

A lawyer licensed to practice law in multiple states, including North Dakota, would like to obtain a real estate salesperson license and may pursue a career as a real estate agent. See N.D.C.C. Ch. 43-23 (setting forth the framework and law for licensure of real estate salespersons in North Dakota). At present, the lawyer does not actively practice law; the lawyer is not a licensed real estate salesperson nor has the lawyer submitted an application for licensure.

The lawyer acknowledges hypothetical questions are presented. While the Committee seeks to provide guidance to lawyers, it cannot provide hypothetical answers to hypothetical questions. With that said, the Committee will generally address the broader question as to the application of the Rules to a lawyer providing law-related services.

QUESTION PRESENTED

1. Isa licensed active lawyer, who is not currently. practicing law, and who is a licensed real
   estate salesperson actively working as a real estate agent, bound by the North Dakota Rules of Professional Responsibility? —

OPINION
I. APPLICABLE NORTH DAKOTA RULES OF PROFESSIONAL CONDUCT

North Dakota Rules of Professional Conduct, Rule 5.7 is most applicable in this request. This . Committee has previously addressed application of Rule 5.7. See, e.g., Opinion No. 01-03 (addressing a question of a lawyer performing tax services); Opinion No. 98-07 (addressing a question of a lawyer selling life insurance). The Rule provides:

(a) A lawyer is subject to these Rules with respect to the provision of law-related services, as defined in paragraph (b), if the law-related services are provided:

(1) by the lawyer in circumstances that are not distinct from the lawyer’s provision of legal services to clients; or

(2) in other circumstances by an entity controlled by the lawyer individually or with others if the lawyer fails to take reasonable measures to assure that a person obtaining the law-related services knows that the services are not legal services and that the protections of the client-lawyer relationship do not exist.

(b) The term “law-related services” denotes services that might reasonably be performed in conjunction with and in substance are related to the provision of legal services, and that are not prohibited as unauthorized practice of law when provided by a nonlawyer.

N.D.R.PROF.CONDUCT Rule 5.7. Comment 7 to Rule 5.7 provides “real estate counseling” as an example of a law-related service. Jd. It is clear that a lawyer working as a real estate salesperson.

would be providing a law-related service. Id.; See, e.g, Nebraska Ethics Advisory Opinion for

Lawyers, No. 06-4 (interpreting a nearly identical version of N.D.R.Prof.Conduct Rule 5.7 that “it is clear from both Nebraska Advisory Opinions, as well as the ethics opinions of other states, that the functions of a real estate broker or agent are ‘law-related services’ under the Rules of Professional Conduct”); Utah Ethics Opinion, No. 17-07 (same).

• Rule 5.7 principally exists to protect members of the public from believing the engagement of a
  lawyer for a law-related service provides them “protections normally afforded as part of the client- lawyer relationship.” N.D.R.PROF.CONDUCT Rule 5.7, at emt. 1. A lawyer may avoid application of some of our Rules by adhering to Rule 5.7(a)(2) by taking “reasonable measures to assure that

a person obtaining the law-related services knows that the services are not legal services and that. -

the protections of the client-lawyer relationship do not exist.” Jd. The comments to the Rule provide some guidance as to what is meant by “reasonable measures”: “communicat[ing] to the person receiving the law-related services, in a manner sufficient to assure that the person understands the significance of the fact, that the relationship of the person to the business entity will not be a client-lawyer relationship.” Jd. at cmt. 5. This communication should be in writing and done prior to entering an agreement to provide a law-related service. Id.

II. DISCUSSION

The Rules do not prohibit a lawyer from engaging in law-related services. Depending on the circumstances, if a lawyer engages in law-related services the lawyer may be bound by all of the Rules or may be excepted from some. Jd. at cmt. 1 (citing Rule 8.4 and noting lawyer conduct, regardless of whether the lawyer is practicing law or providing only law-related services, would always apply to a lawyer). The lawyer requesting this opinion, however, has posed hypothetical scenarios to which this Committee cannot speculate upon.

_ An active North Dakota lawyer who does not practice law and engages in the law-related service as a real estate salesperson must comply with Rule 5.7. Such a lawyer will be bound by the Rules with respect to providing only real estate services unless the lawyer takes reasonable measures, under the circumstances, to assure a person obtaining the real estate services knows that the services are not legal services and that the protections of the client-lawyer relationship do not exist. Rule 5.7(a)(2). A lawyer who is working as a real estate salesperson can take “reasonable measures” by taking special care to communicate, in. writing and prior to the engagement of real estate related services, with the real estate client that no client-lawyer relationship will exist or be formed. A lawyer who is a real estate salesperson should also take special care to separate providing real estate services from providing legal services. For example, activities such as the drafting or editing of contracts; providing advice on, or interpreting, a contract or warranty provision; the application of environmental or zoning laws to a real estate transaction; and other

similar law-related services that are “closely entwined” with legal services, would constitute the practice of law and invoke the application of all of the Rules. See Rule 5.7, cmt. 6; Utah Ethics Opinion, No. 17-07.

CONCLUSION

The answer to the question presented depends on the circumstances and cannot be answered definitively because the lawyer requesting the opinion is not engaged in any law-related services and presents hypothetical scenarios. It is possible that a lawyer who is not practicing law and is solely providing real estate services, which are law-related services, may not be bound by all of Rules of Professional Conduct. A lawyer will always be bound to some aspects of our Rules. See N.D.R.PROF.CONDUCT Rule 5.7, cmt. 1, and Rule 8.4. A lawyer who is not practicing law and works solely as a real estate salesperson should provide a clear disclaimer, in writing, prior to being engaged by a real estate client, that an attorney-client relationship does not exist if the lawyer desires to limit application of the Rules when providing only real estate services. Such a lawyer

must take special care to avoid closely entwining the provision of real estate services with the provision of legal services. -

This opinion was drafted by Zachary Pelham and was approved by the Ethics Committee on the

11™ day of December, 2019.

Ethics Committee Chairperson

This opinion is provided under Rule 1.2(B), North Dakota Rules for Lawyer Discipline, which states:

A lawyer who acts with good faith and reasonable reliance on a written opinion or advisory letter of the ethics committee of the association is not subject to sanction for violation of the North Dakota Rules of Professional Conduct as to the conduct that is the subject of the opinion or advisory letter.